4Q2011 Earnings Presentations1.q4cdn.com/101769452/files/doc_presentations/2012... · 3 Select...

4Q2011 Earnings Presentation

Notes & Disclaimers

2

Discussion of Forward-Looking Statements by BGC Partners

Information in this document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended,

and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward looking statements include statements about the outlook

and prospects for the Company and for its industry as well as statements about its future financial and operating performance. Such statements

are based upon current expectations that involve risks and uncertainties. Actual results, performance or achievements could differ materially

from those contemplated, expressed or implied because of a number of risks and uncertainties that include, but are not limited to, the risks and

uncertainties identified in BGC Partners’ filings with the U.S. Securities and Exchange Commission. The Company believes that all forward-

looking statements are based upon reasonable assumptions when made. However, BGC Partners cautions that it is impossible to predict actual

results or outcomes or the effects of risks, uncertainties or other factors on anticipated results or outcomes and that accordingly you should

not place undue reliance on these statements. Forward-looking statements speak only as of the date when made, and the Company undertakes

no obligation to update these statements in light of subsequent events or developments. Please refer to the complete disclaimer with respect to

forward-looking statements and the risk factors set forth in BGC Partners’ most recent public filings on Form 8-K and/or 10-Q, which are

incorporated into this document by reference.

Note Regarding Financial Tables and Metrics

Excel files with the Company’s quarterly financial results and metrics from full year 2008 through 4Q2011 are accessible in the various financial

results press releases at the “Investor Relations” section of http://www.bgcpartners.com. They are also available directly at

http://www.bgcpartners.com/ir-news.

Distributable Earnings

This presentation should be read in conjunction with BGC’s most recent financial results press release. Unless otherwise stated, throughout this

presentation we refer to our results only on a distributable earnings basis. For a complete description of this term and how, when and why

management uses it, see the final page of this presentation. For both this description and a reconciliation to GAAP, see the sections of BGC’s

most recent financial results press release entitled “Distributable Earnings,” “Distributable Earnings Results Compared with GAAP Results”, and

“Reconciliation of GAAP Income to Distributable Earnings”, which are incorporated by reference, and available in the “Investor Relations”

section of our website at http://www.bgcpartners.com.

3

Select 4Q2011 Results Compared to 4Q2010

Revenues were up 13.3% to $365.3 million versus $322.5 million in 4Q10

Pre-tax earnings were up 5.0% to $47.7 million versus $45.4 million

Pre-tax earnings per fully diluted share were down 5.2% to $0.18

Effective tax rate increased to 11.7% versus 10.9% in 4Q10

Post-tax earnings improved by 1.2% to $40.3 million versus $39.8 million

Post-tax earnings per fully diluted share were down 5.9% to $0.16

The pre-tax earnings margin decreased to 13.1% of revenues from 14.1% while the

post-tax earnings margin decreased to 11.0% from 12.3%

BGC Partners’ Board of Directors declared a quarterly cash dividend of $0.17 per

share payable on March 28, 2012 to Class A and Class B common stockholders of

record as of March 14, 2012.

4

EMEA

45.7% Americas

40.5%

APAC

13.8%

4Q2011 Revenues

4Q2011 Global Revenue Breakdown

Europe, Middle East & Africa Revenue down 8.9% y-o-y

Americas Revenue up 2.4% y-o-y

Asia Pacific Revenue down 0.2% y-o-y

5

Full Year 2011 Global Revenue Breakdown

EMEA

52.3% Americas

32.0%

APAC

15.8%

Europe, Middle East & Africa Revenue up 7.0% y-o-y

Americas Revenue up 0.4% y-o-y

Asia Pacific Revenue up 16.1% y-o-y

Full Year 2011 Revenues

6

Rates 35.1%

Credit 18.1%

Equities and Other Asset

Classes 12.1%

Foreign Exchange

13.0%

Real Estate brokerage

14.9%

Market data & software

1.8%

Fees from related parties,

interest & other

income 5.1%

4Q2011 Revenue Breakdown by Product

Up 13.2% y-o-y

Revenues related to fully

electronic trading* =

10% of total DE

revenues in 4Q2011

(11.8% excluding Real

Estate) vs. 10% in

4Q2010

* This includes fees captured in both the “total brokerage revenues” and “ fees from related party” line items related to fully electronic trading.

Note: percentages may not sum to 100% due to rounding.

7

Rates 39.2%

Credit 21.3%

Equities and Other Asset

Classes 14.5%

Foreign Exchange

14.8%

Real Estate brokerage

3.7%

Market data & software

1.8%

Fees from related parties, interest & other

income 4.6%

Full Year 2011 Revenue Breakdown by Product

Up 23.6% y-o-y

Revenues related to fully

electronic trading* =

10.5% of total DE

revenues in FY2011 vs.

9.4% in FY2010


Note: percentages may not sum to 100% due to rounding.

Rates

35.1%

8

$0

$100

$200

$300

$400

$500

$600

FY 2010 FY 2011 Q4 2010 Q4 2011

$556.2 $578.5

$135.9 $128.1

(US

D m

illio

ns)

Brokerage Overview: Rates

• Interest rate derivatives

• US Treasuries

• Global Government Bonds

• Agencies

• Futures

• Dollar derivatives

• Repurchase agreements

• Non-deliverable swaps

• Interest rate swaps & options

Rates Revenue Growth

% of 4Q2011 Total Distributable Earnings Revenue Example of Products

• Ongoing global sovereign debt issues and economic uncertainty increase volatility

• Strong industry volumes for the year, slower in 4Q2011

• BGC’s 32% growth in Rates e-broking for FY 2011 versus 2010, driven by strength in US Treasuries and Interest Rate Derivatives

Drivers

70%

80%

90%

100%

110%

120%

130%

140%

150%

160%

4Q10 1Q11 2Q11 3Q11 4Q11

Rates Volume % Change (YoY; 4Q2010 = 100)

BGC Fully Electronic Rates* (Notional Vol US $B) BGC Fully Electronic Rates* (Transaction Count Trillions)EUREX - Bond Contracts Volume CBOT - US Treasury Contracts

CME - Euro $ Contracts Fed UST Volume (Billions)

ICAP Fixed Income *TriOptima Interest Rate Swaps Turnover

9

BGC Fully Electronic Rate Volumes Outpace Industry

Source: CME/Eurex/CBOT - Futures Industry Association - Monthly Volume Report - (www.cme.com, www.eurexchange.com),

ICAP Volume Report (www.icap.com), Fed US-T Volume (www.newyorkfed.org/markets/statrel.html - Federal Reserve Bank ).

*Trioptima is shown as transaction volumes for the last week of each quarter, as shown on their website.

BGC fully electronic

Rates transactions up

1.7% in 4Q11

BGC fully electronic

Rates notional

volume down 7.4% in

4Q11

Credit

18.1%

$0

$100

$200

$300

$400

$500

FY 2010 FY 2011 Q4 2010 Q4 2011

$311.0 $315.0

$70.3 $66.1

(US

D m

illio

ns)

10

Brokerage Overview: Credit

• Credit derivatives

• Asset-backed securities

• Convertibles

• Corporate bonds

• High yield bonds

• Emerging market bonds

Credit Revenue Growth

% of 4Q2011 Total Distributable Earnings Revenue

Example of Products

Drivers


• Credit revenues increased by 1.3 percent in 2011, despite an industry-wide decline in corporate bond and credit derivative volumes compared to 2010

• BGC’s 26% y-o-y growth in e-brokered Credit products in FY 2011

Trace All Bond Dollar Volumes

GFI Fixed Income Rev

Total Corporate Debt Issuance (USD)

DTCC Gross Notional Contracts (USD EQ)

ICE Creditex Rev

BGC Fully Electronic

Credit Volume

-20% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30%

11

BGC’s E-brokered Credit Desks Eclipsed Overall Industry

Sources: The Depository Trust and Clearing Corporation, “DTCC” data as of Dec month end 2011 vs Dec month end 2010, Dealogic, Credit

Suisse, Company websites, “TRACE” (Trade Reporting and Compliance Engine). Creditex is ICE’s OTC credit execution business.

25%

5%

(8%)

(16%)

2%

4Q 2011 Y-O-Y Growth

(10%)

FX 13.0%

12

$0

$25

$50

$75

$100

$125

$150

$175

FY 2010 FY 2011 Q4 2010 Q4 2011

$183.8 $218.4

$48.0 $47.4

(US

D m

illio

ns)

Brokerage Overview: Foreign Exchange

• Foreign exchange options

• G-10

• Emerging markets

• Cross currencies

• Exotic options

• Spot FX

• Emerging market FX options

• Exotic FX options

• Non-deliverable forwards

Foreign Exchange Revenue Growth

% of 4Q2011 Total Distributable Earnings Revenue Example of Products


• Particular strength in emerging markets

• Double-digit growth in 2011 for BGC’s fully electronic spot FX businesses versus 2010

Drivers

-9% -6%

4%

10%

43%

-20%

-10%

0%

10%

20%

30%

40%

50%

(Gro

wth

)

CME FX

Futures

Volumes

EBS Spot FX

Average Daily

Volumes

Reuters Spot FX

Average Daily

Volumes

BGC’s Fully Electronic

FX Volume*

13


BGC’s Fully Electronic FX Business Continues to

Gain Market Share

CLS

Average Daily

Values

Source: ICAP, CME, CLS, Reuters websites. CME FX Futures growth based on average daily contract volume, ICAP Spot FX and Reuters Spot FX based on

average daily USD volume. BGC data is based on USD notional volume for 4Q2011. CLS Bank data includes FX spot, swap and outright forward products. CLS

values are the total USD value of settlement instructions submitted to CLS on trade date. The CLS values should be divided by two for spot and forward values

and by four for swap values to equate to the values reported in the BIS tri-annual surveys.

*Includes all e-brokered BGC spot

FX and derivative volume.

Equities & Other

12.1%

14

Brokerage Overview: Equities & Other Asset Classes

Equities & Other Asset Classes Revenue Growth

$0

$25

$50

$75

$100

$125

$150

$175

$200

$225

FY 2010 FY 2011 Q4 2010 Q4 2011

$177.6

$214.5

$43.5 $44.2

(US

D m

illio

ns)

% of 4Q2011 Total Distributable Earnings Revenue

Example of Products

• Equity derivatives

• Cash Equities

• Index futures

• Commodities

• Energy derivatives

• Other derivatives and futures


• The addition of assets from Mint

• BGC grew despite mixed-to-lower industry volumes

Drivers

-13.0%

-8.7%

0.5% 0.8% 1.4%

13.7%

-15%

-5%

5%

15%

(Gro

wth

)

15


“Equities and Other” Desks Largely Outperformed

Note: Cash equities growth percentages based on average daily shares traded for US exchanges. Equity derivatives based on equity option

average daily volume from OCC, Eurex, and Euronext. For Euronext, growth is based on total European equity derivative product volume.

Sources: erdesk.com for US equities volumes, OCC for US Equity option volumes, Credit Suisse research for Euronext and Eurex volumes,

company press release for GFIG revenues.

OCC US

Equity

Options

Volumes

Eurex Equity

Derivative

Volumes

Euronext Equity

Derivative Volumes

BGC’s “Equities

and Other”

Revenues

Total US

Equities

Volume

(Tapes A+B+C)

GFIG Equity

Revenues

Real Estate Brokerage

14.9%

16

Brokerage Overview: Real Estate % of 4Q2011 Total Distributable Earnings

Revenue Example of Products

• Leasing Advisory

• Global Corporate Services

• Investment Sales & Financial Services

• Retail Services

• Property & Facilities Management

• Consulting

• Project and Development Management

• Industrial Services

• Improving US economy and employment in key Newmark Knight Frank markets

• Improved net absorption in key US office, industrial, and other markets

• Higher asking rents in key US markets

• Improving vacancy rate in key US markets

Drivers

Note: Newmark Knight Frank revenue is only included for the period after the acquisition closed on October 14, 2011.

Source: Newmark Knight Frank Research and CoStar on overall industry for 30 key US cities.

Real Estate Revenue

$0

$25

$50

$75

FY 2011 Q4 2011

$54.4 $54.4

(US

D m

illio

ns)

17

Commercial Real Estate Market Improving Nationally US Office Market

US Industrial Market

Notes and sources: The first two charts show data for 30 U.S. office markets, the second two the U.S. industrial markets, based on data

from Newmark Knight Frank Research and CoStar on overall industry for 30 key US cities.

.

18

Excited About Newmark Knight Frank Acquisition

Founded in Manhattan in 1929

One of the fastest growing commercial real estate brokerage companies

Includes US business & does not involve any offices outside US

For ≈ $63 mm in cash & 339,000 shares of BGC’s Class A common stock +

potential earn-out of up to ≈ 4.8 mm additional shares over 5 years

Expected to be accretive to BGC in first year

NKF led by CEO Barry Gosin & President Jimmy Kuhn

Note: On October 14, 2011, BGC acquired all of the outstanding shares of Newmark & Company Real Estate, Inc., plus a

controlling interest in its affiliated companies. Newmark & Company Real Estate, Inc. and certain independently-owned partner

offices operate as “Newmark Knight Frank” in the Americas, and are associated with London-based Knight Frank. BGC’s

discussion of financial results for “Newmark Knight Frank” or “Real Estate” reflect only those businesses owned by BGC and do

not include the results for these independently-owned partner offices or for Knight Frank.

Newmark Knight Frank Acquisition (Continued)

19

Opportunity to recreate the success we have had at BGC

Approximately 400 brokers; with Knight Frank are part of 7,000 + person

global network

BGC will apply its powerful technology, expertise with inferential pricing to

grow NKF

BGC expands NKF’s access to financial services clients

Bespoke property derivatives will enable brokers to help their clients hedge

against changes in real estate prices

Also Excited About Grubb & Ellis Transaction

20

BGC expects synergies between Newmark Knight Frank's consultative

approach to creating value for clients and Grubb & Ellis' transactional and

management services

Grubb & Ellis and Newmark Knight Frank both have broad knowledge and

extensive brokerage expertise

Relationship-driven business models

BGC real estate platform enhances Grubb and Ellis’ value proposition and

competitive advantage in the real estate marketplace.

1,705 1,718 1,780 1,774

2,147

0

500

1,000

1,500

2,000

4Q 2010 1Q 2011 2Q 2011 3Q 2011 4Q 2011

(Fro

nt

Off

ice E

mp

loyees)

21

$0

$200

$400

$600

$800

$1,000

$1,200

2010 2011 4Q2010 4Q2011

$799 $785

$180 $163

($ t

ho

usa

nd

s)

BGC’s Front Office Employee Growth

Front Office Productivity (in thousands)

Note: Front office productivity is calculated as “total brokerage revenue,” “market data and software sales revenue,” and the portion of “ fees from related

party” line items related to fully electronic trading divided by average front office headcount for the relevant period.

(9.7%)

Front Office Headcount

BGC Partners’ average revenue per front office employee has historically declined year-over-year for the periods following

significant headcount increases, as new brokers and salespeople generally achieve significantly higher productivity levels in

their second year with the Company.

$10

$15

$20

$25

$30

$35

$40

$45

4Q2010 1Q2011 2Q2011 3Q2011 4Q2011

$32.2

$39.1 $40.5

$38.9

$36.4

($ m

illio

ns)

22

$5

$10

$15

$20

4Q2010 1Q2011 2Q2011 3Q2011 4Q2011

$12.6

$15.1 $14.9 $15.1

$12.1

($ t

rillio

ns)

BGC’s Fully Electronic Growth

Fully Electronic Revenues (in millions)* Fully Electronic Notional Volumes (in trillions)

Y-o-Y Growth (4.3%)

Over time, higher fully electronic revenues has = improved margins


23

BGC Partners Compensation Ratio

$644.9

$719.6 $713.3

$749.8 $793.5

57.7% 58.2%

60.9%

56.2% 53.8%

0%

10%

20%

30%

40%

50%

60%

70%

$0

$100

$200

$300

$400

$500

$600

$700

$800

2007 2008 2009 2010 2011

($ m

illio

ns)

Compensation and Employee Benefits Compensation and Employee Benefits as % of Total Revenue

4Q2011 BGC Partners Compensation Ratio = 54.2% vs 53.8% in 4Q2010

24

Operating Leverage / Fixed Expense Base

Non-comp expenses were 32.8% of distributable earnings revenues in 4Q2011 versus 32.1% in 4Q2010

Pre-tax distributable earnings margin was 13.1% in 4Q2011 vs. 14.1% in 4Q2010

Post-tax distributable earnings margin was 11.0% in 4Q2011 vs. 12.3% in 4Q2010

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

6% 11% 10%

14% 16%

36%

31% 29% 30% 30%

0%

10%

20%

30%

40%

50%

Pre-tax distributable earnings as % of Total Revenue Non-comp Expenses as a % of Total Revenue

$200

$225

$250

$275

$300

$325

$350

$375

$400

$425

Q4 2010 Q4 2011 Q1 2011 Q1 2012 low Q1 2012 high

$322

$365 $366

$390

$410

($ m

illio

ns)

25

BGC’s Revenue Trend (millions)

Outlook

1Q2012 includes approx $45 to $55 million from Newmark Knight Frank and no potential revenues from Grubb & Ellis.

Up 7% - 12% y-o-y

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

$55

$60

4Q10 4Q11 1Q11 1Q12

Low

1Q12

High

$39.8 $40.3

$54.8

$49

$56

($ m

illio

ns)

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

$55

$60

$65

$70

4Q10 4Q11 1Q11 1Q12

Low

1Q12

High

$45.4 $47.7

$64.3

$58

$66

($ m

illio

ns)

26

Distributable Earnings Growth

Pre-tax Distributable Earnings Growth Post-tax Distributable Earnings Growth

Fourth quarter pre-tax & post-tax distributable earnings per fully diluted share were down 5.2% and

5.9% y-o-y, respectively

BGC anticipates its effective tax rate for distributable earnings to remain unchanged at 15% percent in

1Q12

Outlook Outlook

100

85

101

96 95

10398

82

111 110

101

88

118

108

122

113

119

105

97

107

122

115 115

93

50

75

100

125

150

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2009 Revenue

2010 Revenue

122

112

131

107

129 129

114

134 132

112 112

84

117

50

75

100

125

150

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2011 Revenue

2012 Revenue

27

Monthly Revenue Performance Excluding Real

Estate ($MM)

Note: February 2012 revenue number is preliminary. The Newmark Knight Frank acquisition closed as of October 14, 2011.

Monthly revenue prior to 2008 is available in the 2010 earnings presentations at www.bgcpartners.com/ir.

BG

C M

on

thly

Dis

trib

uta

ble

Earn

ings

Reven

ues

($M

M)

Excluding Real Estate,

revenue for the 1st 14

trading days of

February up 3%

y-o-y to ≈$84 mm

Revenue for August 2010

included $11.6M in “other

revenues” as the result of

a favorable arbitration

ruling pertaining to Refco

Securities.

In addition to the above, Real Estate generated $54.4 mm in “brokerage revenues” and $2.7 mm in “other

revenues” in 4Q2011. BGC expects Real Estate to generate between $45 and $55 million in 1Q2012.

28

BGC’s Economic Ownership as of 12/31/2011

Public 34%

Cantor 30%

Employees, Executives, & Directors

36%

Note: Employees, Executives, and Directors ownership figure attributes all units (PSUs, FPUs, RSUs, etc) and distribution rights to founding partners &

employees and also includes all A shares owned by BGC executives and directors. Cantor ownership includes all A and B shares owned by Cantor as well as all

Cantor exchangeable units and certain distribution rights. Public ownership includes all A shares not owned by executives or directors of BGC. The above chart

excludes shares related to convertible debt.

29

Current Tax Equivalent Yield Analysis

Note: Based on stock price as of 2/23/12 close.

TAX ASSUMPTIONS BGCP STOCK ASSUMPTIONS

Qualified Ordinary

Annual

Dividend

BGCP

Price

Pre-Tax

Yield

Federal 15.0% 35.0% 0.68$ 6.76$ 10.1%

New York State 9.0% 9.0%

New York City 3.9% 3.9%

Net itemized deduction -4.5% -4.5%

effective rate 23.3% 43.3%

2010 Actual 18 " " One company pays qualified dividend, 100% taxable

Hypothical Scenario 1 50 " " Another company pays distribution 100% taxable as ordinary income

2011 Minimum Expected 79 % is non-taxable

Hypothical Scenario 2 100 " "

BGCP VERSUS ALTERNATE INVESTMENTS

Required Pre-Tax

Yield Taxable

Ordinary Income

18 14.4%

50 15.7%

79 16.9%

100 17.8%

12.5%

13.1%

NON-TAXABLE PERCENTAGE OF BGCP

DIVIDEND ASSUMPTIONS

ASSUMPTIONS ABOUT ALTERNATE

INVESTMENTS

% of BGCP Dividend

That isNon-Taxable

BGC Pre-tax Yield

BGC After-Tax

Yield

Required Pre-Tax

Yield Qualified

Dividend

10.1%

10.1%

10.1%

10.1%

8.1%

8.9%

9.6%

10.1%

10.6%

11.6%

10.1% 10.1% 10.1% 10.1%

8.1%

8.9%

9.6%10.1%

10.6%

11.6%

12.5%

13.1%

14.4%

15.7%

16.9%

17.8%

5.0%

7.0%

9.0%

11.0%

13.0%

15.0%

17.0%

19.0%

10.1% 10.1% 10.1% 10.1%

18 50 79 100

BGC Pre-tax Yield BGC After-Tax Yield

Required Pre-Tax Yield Qualified Dividend Required Pre-Tax Yield Taxable Ordinary Income

30

Current Tax Equivalent Yield Analysis (Continued)

In 2011, a fully taxable qualified dividend would need to be 15% higher or $0.78 per share for

investors to receive the same after-tax income as from a $0.68 per share BGCP dividend; a fully

taxable dividend or distribution would need to be $1.06 or 56% higher per share or unit.

Note: Based on stock price as of 2/23/12 close.

31

Average Exchange Rates

Source: Oanda.com. *Inverted.

Average

4Q2011 4Q2010 Feb 1- 21, 2012 Feb 1 -21, 2011

US Dollar 1 1 1 1

British Pound 1.572 1.581 1.579 1.610

Euro 1.349 1.360 1.317 1.362

Hong Kong Dollar 0.129 0.129 0.129 0.128

Singapore Dollar 0.777 0.767 0.798 0.783

Japanese Yen* 77.310 82.540 77.560 82.690

Distributable Earnings

32

BGC Partners uses non-GAAP financial measures including "Revenues for distributable earnings," "pre-tax distributable earnings" and "post-tax distributable earnings," which

are supplemental measures of operating performance that are used by management to evaluate the financial performance of the Company and its subsidiaries. BGC Partners

believes that distributable earnings best reflects the operating earnings generated by the Company on a consolidated basis and are the earnings which management considers

available for distribution to BGC Partners, Inc. and its common stockholders, as well as to holders of BGC Holdings partnership units during any period. As compared with

"income (loss) from operations before income taxes," "net income (loss) for fully diluted shares," and "fully diluted earnings (loss) per share," all prepared in accordance with

GAAP, distributable earnings calculations primarily exclude certain non-cash compensation and other expenses which generally do not involve the receipt or outlay of cash by

the Company, which do not dilute existing stockholders, and which do not have economic consequences, as described below. In addition, distributable earnings calculations

exclude certain gains and charges that management believes do not best reflect the ordinary operating results of BGC. Revenues for distributable earnings are defined as

GAAP revenues excluding the impact of BGC Partners, Inc.'s non-cash earnings or losses related to its equity investments, such as in Aqua Securities, L.P. and ELX Futures,

L.P., and its holding company general partner, ELX Futures Holdings LLC. Revenues for distributable earnings will also include the collection of receivables which would have

been recognized for GAAP other than for the effect of acquisition accounting. Pre-tax distributable earnings are defined as GAAP income (loss) from operations before

income taxes excluding items that are primarily non-cash, non-dilutive, and non-economic, such as: Non-cash stock-based equity compensation charges for REUs granted or

issued prior to the merger of BGC Partners, Inc. with and into eSpeed, as well as post-merger non-cash, non-dilutive equity-based compensation related to partnership unit

exchange or conversion. Allocations of net income to founding/working partner and other units, including REUs, RPUs, PSUs and PSIs. Non-cash asset impairment charges, if

any. Distributable earnings calculations also exclude charges related to purchases, cancellations or redemptions of partnership interests and certain one-time or non-recurring

items, if any. “Compensation and employee benefits” expense for distributable earnings will also include broker commission payouts relating to the aforementioned collection

of receivables. Beginning with the second quarter of 2011, BGC’s definition of distributable earnings was revised to exclude certain gains and charges with respect to

acquisitions, dispositions, and resolutions of litigation. This change in the definition of distributable earnings is not reflected in, nor does it affect the Company’s presentation

of prior periods. Management believes that excluding these gains and charges best reflects the operating performance of BGC. Since distributable earnings are calculated on a

pre-tax basis, management intends to also report "post-tax distributable earnings" and "post-tax distributable earnings per fully diluted share": "Post-tax distributable earnings"

are defined as pre-tax distributable earnings adjusted to assume that all pre-tax distributable earnings were taxed at the same effective rate. "Post-tax distributable earnings

per fully diluted share" are defined as post-tax distributable earnings divided by the weighted-average number of fully diluted shares for the period. BGCs’ distributable

earnings per share calculations assume either that: The fully diluted share count includes the shares related to the dilutive instruments, such as the Convertible Senior Notes,

but excludes the associated interest expense, net of tax, when the impact would be dilutive, or; The fully diluted share count excludes the shares related to the dilutive

instruments, but includes the associated interest expense, net of tax. Each quarter, the dividend to common stockholders is expected to be determined by the Company’s

Board of Directors with reference to post-tax distributable earnings per fully diluted share. In addition to the Company’s quarterly dividend to common stockholders, BGC

Partners expects to pay a pro-rata distribution of net income to BGC Holdings founding/working partner and other units, including REUs, RPUs, PSUs and PSIs, and to Cantor

for its noncontrolling interest. The amount of all of these payments is expected to be determined using the above definition of pre-tax distributable earnings per share.

Certain employees who are holders of RSUs are granted pro-rata payments equivalent to the amount of dividends paid to common stockholders. Under GAAP, a portion of

the dividend equivalents on RSUs is required to be taken as a compensation charge in the period paid. However, to the extent that they represent cash payments made from

the prior period's distributable earnings, they do not dilute existing stockholders and are therefore excluded from the calculation of distributable earnings. Distributable

earnings is not meant to be an exact measure of cash generated by operations and available for distribution, nor should it be considered in isolation or as an alternative to

cash flow from operations or GAAP net income (loss). The Company views distributable earnings as a metric that is not necessarily indicative of liquidity or the cash available

to fund its operations. Pre- and post-tax distributable earnings are not intended to replace the Company’s presentation of GAAP financial results. However, management

believes that they help provide investors with a clearer understanding of BGC Partners’ financial performance and offer usefu l information to both management and investors

regarding certain financial and business trends related to the Company’s financial condition and results of operations. Management believes that distributable earnings and the

GAAP measures of financial performance should be considered together. Management does not anticipate providing an outlook for GAAP “revenues”, “income (loss) from

operations before income taxes”, “net income (loss) for fully diluted shares,” and “fully diluted earnings (loss) per share”, because the items previously identified as excluded

from pre-tax distributable earnings and post-tax distributable earnings are difficult to forecast. Management will instead provide its outlook only as it relates to revenues for

distributable earnings, pre-tax distributable earnings and post-tax distributable earnings. For more information on this topic, please see the table in BGC’s 4Q2011 financial

results release entitled “Reconciliation of GAAP Income to Distributable Earnings” which provides a summary reconciliation between pre- and post-tax distributable earnings

and the corresponding GAAP measures for the Company in the periods discussed in this presentation.

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